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Tuesday, September 18, 2012

State paying bond interest on privatized forensic psych facility

Not only did the Legislature in 2009 approve a contract with a publc-private psychiatric facility in Montgomery County that the state Department of Health Services never requested (the GEO-Group run facility was tacked on during the budget conference committee), now it turns out the state is paying interest on the construction bonds. The Statesman's Andrea Ball reported ("Is state paying off bonds for county-owned psychiatric hospital?", Sept. 17):

The Department of State Health Services has spent more than $2 million on bond
interest for a psychiatric hospital that it doesn't own and that was
championed by Senate Finance Chairman Tommy Williams.

But that's not all the state is paying for, said Montgomery County
Commissioner Ed Chance, who spearheaded the effort to build the Conroe
facility. If its allocations remain the same, State Health Services will
eventually pay off the entire $32 million Montgomery County borrowed to
finance the hospital, he said.

"If they hadn't agreed to the funding behind it, we wouldn't have built
it," Chance said.

The state maintains that it's not covering the total cost of the hospital's
construction, just the interest. State Health Services pays the county $15
million a year for psychiatric services for patients accused of crimes and
deemed incompetent to stand trial.

Ball further observed that: "On its face, the state's contract with Montgomery County seems to prohibit any
payments on the facility. 'Department funds must not be used to
purchase buildings or real property,' the contract states. 'Any
costs related to the initial acquisition of buildings or real property are
not allowable.'"However, "State Health Services, however, says interest payments are acceptable because
they are considered an ongoing expense of the facility." But think about it: If you take out a mortgage to build your house, isn't the interest part of the cost of construction? The same is true for this project.

This project was borne of a backroom deal at the Lege and never fully vetted - certainly in public hearings - before legislative budget writers surprised virtually everyone except insiders with its inclusion in 2009. But this seems too much: Montgomery County and the GEO Group should be required to repay the interest already forked over by state taxpayers and those payments should be ended going forward. Such deals are referred to as "privatization," but in reality only profits are privatized and costs are socialized.

RELATED: ReportingTexas.com has a preview of a Texas House County Affairs Committee hearing today in Houston related to competency restoration services. Regrettably, since it's not happening at the capitol, the hearing won't be broadcast live online.

2 comments:

Most people probably don't remember this story in 2009 where a certain claim was made by Tommy Williams. Note the section of the article where Tommy Williams states it is such a great opportunity to buy services without the state having to build. This was obviously not accurate. They need to pay every dollar back.

Montgomery County awarded a design-build contract for a new forensic mental health facility after the state accepted a proposal to provide $15 million in funding to operate the facility.

The secure 100-bed facility, to be located next to the Joe Corley Correction Center on Hilbig Road in Conroe, is designed to serve criminal offenders committed through the courts, including those incompetent to stand trial or those guilty by reason of insanity. It is expected to provide an alternative to the overcrowded Rusk State Hospital for counties in the region.

“It is a great opportunity to meet the needs of Montgomery County for forensic patients,” said Precinct 3 Commissioner Ed Chance. “It will bring with it 80 new jobs and these are very high paying jobs.”

The Texas Department of Health Services sent a letter to the county accepting its proposal to build and operate a forensic unit in Montgomery County. It is the only county that qualifies for the $15 million appropriation that was a rider to the 2010 state budget. The rider, sponsored by state Senator Tommy Williams, R-The Woodlands, was specifically designed for Montgomery County.

“It is a great opportunity for the state to expand its services without having to build anything,” Williams said. “It is a great opportunity for the region to have a state psychiatric facility near by, instead of having deputies transport patients to Rusk, which is generally at capacity, and then they have to go to Vernon, which is almost to the Oklahoma border. The entire region will benefit from this, including Liberty, Harris and Walker counties. It can include everyone over to the Sabine Pass.”

The county and the Department of Health Services will negotiate an interlocal agreement to comply with state regulations to operate the facility. As part of the process, the county will have to be certified by the state and the federal Joint Commission on Health Care.

Montgomery County plans to hire GEO Cares, Inc, a subsidiary of GEO Group, which is managing the county's Joe Corley Detention Center for federal inmates and detainees from the U.S. Marshall Service and the Immigration and Customs Enforcement Agency. GEO Cares operates similar mental health facilities in Florida.

To build the facility, the county expects to issue certificate of obligation bonds, a limited tax and revenue bonds, in January, said Linda Breazeale, a financial consultant to Montgomery County Commissioners Court. The debt on those bonds will be included in the cost of operating the facility.

Alliance Development was selected to build the new facility for up to $32 million, and it must complete the project by March 2011 or face penalties. That is when the state will begin issuing payments of $7.5 million for the first six months of operations.

To expedite construction, Alliance already has meet with GEO Cares and provided preliminary plans based on a similar GEO Cares facility in Florida. It also plans to use the same architect from the Florida project for the Montgomery County facility.

“We are already ahead of schedule with our plans,” Breazeale said. “We've seen the facility and we think it is very appropriate for our needs.”

In case state funding falls through, the Alliance contract includes a termination clause.

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